Here's why Paramount will win the $100bn battle for Warner Bros

Paramount Skydance has done something old-fashioned in a very modern media war. It has put real money on the table and dared Warner Bros Discovery’s board to keep saying no.

After months of private approaches, David Ellison has turned his pursuit of Warner Bros Discovery into a hostile contest with Netflix. He has gone directly to shareholders with a $30 a share all-cash offer for the whole company, valuing WBD at about $108 billion including debt. That compares with Netflix’s agreed $27.75 per share mix of cash and stock for only the studio and streaming assets, which values WBD at about $82.7 billion on an enterprise basis.

On price, simplicity and politics, Paramount has built a credible path to victory. If it loses from here, it will be because it failed to persuade shareholders and regulators that its financing, governance and longer-term strategy are as solid as its headline cheque.

Why Paramount’s story now resonates

Three weeks ago, Paramount looked like the loser. The WBD board rejected a series of escalating Paramount offers and chose Netflix because it viewed the streamer’s proposal as the only fully financed, binding bid that could be executed quickly.

What has changed is that Ellison has removed most of the ambiguity.

First, the offer is unambiguously higher. Thirty dollars in cash beats $23.25 in cash plus $4.50 of Netflix stock that may or may not hold its value through a lengthy regulatory process. For institutional investors judged on quarterly marks, the certainty of cash matters.

Second, Paramount’s financing has come into focus. The company has lined up tens of billions of dollars in committed debt from a bank group that includes Bank of America and Citi, with the balance coming from equity provided by the Ellison family and a syndicate that includes Jared Kushner’s Affinity Partners and several Gulf sovereign wealth funds. That structure may be controversial, but it answers the question that allowed WBD’s board to dismiss earlier bids.

Third, the market is effectively voting with its feet. Netflix shares have fallen since the deal was unveiled, as analysts question the cost, execution risk and regulatory uncertainty around its $82.7 billion acquisition. WBD and Paramount Skydance, by contrast, have risen. That matters because WBD’s institutional holders are acutely aware of how Wall Street is reading the situation.

Put simply, Paramount has turned up with more money, clearer funding and a story that now sounds less speculative than Netflix’s.

Shareholder arithmetic favours the hostile bidder

This is now a contest not only of strategy but of process.

Netflix has a signed merger agreement. WBD has committed to sell its studio and streaming operations to Netflix, then spin off its CNN and Discovery-branded cable networks into a separate company, Discovery Global, which existing shareholders would own. That agreement carries a sizeable break fee if WBD walks away, payable to Netflix.

Paramount’s tender offer circumvents the board by going straight to the owners. If a large proportion of WBD shares are tendered at $30, the board will struggle to maintain that the Netflix deal still represents “best available value” even after the break fee and tax leakage. The higher the tender participation, the more credible any Paramount request becomes for the WBD board to revisit its recommendation.

Directors have a duty to maximise value, not to reward Netflix for coming first. If they appear to disadvantage shareholders in order to protect a previously chosen partner, they invite lawsuits and activist campaigns. For seasoned takeover investors, that logic is familiar. Tender momentum can quickly turn into board capitulation, or at least into a demand that Netflix raises its offer.

That is why, structurally, Paramount has given itself a good chance. It needs to persuade investors of two things: that its cash is real and that its deal is more likely to close than Netflix’s. On both counts, the ground is shifting.

Why Netflix is on the defensive

When the Netflix deal was announced, its strategic logic was easy to sketch. Combine the leading streaming platform with one of the deepest libraries in Hollywood; fuse Netflix’s data and product discipline with HBO’s prestige storytelling; keep Discovery’s legacy networks separate so Netflix is not dragged into linear TV decline.

The problem is that regulators and politicians see something else: the largest subscription streaming platform acquiring one of its main content rivals. Where Netflix executives talk about synergies, critics talk about concentration.

Senator Elizabeth Warren and entertainment unions have already called for the Netflix–Warner deal to be blocked, warning that it would weaken competition for talent and content, and potentially reduce choice for viewers. President Trump has publicly expressed concerns about Netflix’s “big market share” and signalled he intends to take a close interest in the review.

At the same time, analysts have highlighted that Netflix would be taking on a large, capital-intensive studio at a time when streaming growth is moderating and social media is capturing more video attention. The downgrades and share price reaction show that investors do not view this as a straightforward value-creating deal.

For WBD shareholders, that matters. They are being asked to accept a sizeable chunk of Netflix stock in a transaction that may face a long, uncertain regulatory process in multiple jurisdictions. The risk is that the deal drags on for two years, during which competitive dynamics and political priorities could change many times.

Against that backdrop, Paramount’s pitch is simple. It says that its deal does not reduce the number of major streaming platforms, that it keeps Netflix as an independent competitor and that it creates a stronger challenger to Disney, Amazon and others. Where Netflix creates a potential winner-take-most narrative, Paramount offers a more plural market.

Regulators may or may not agree. But as a talking point for WBD investors, it is compelling.

Why Paramount is likely to prevail

Investors and media executives use different language, but they are weighing the same basic issues: price, certainty and the future shape of the industry.

On price, Paramount is ahead. Its offer is plainly richer; even after taking account of the Netflix break fee, Paramount provides more value per share on any reasonable set of assumptions.

On certainty, the gap is closing. The public disclosure of bank commitments and equity backers makes it difficult for the WBD board to argue that Paramount’s money is not real. At the same time, Netflix’s regulatory path looks harder than it did on day one, as opposition coalesces and its own investors question the logic.

On industry structure, many in Hollywood quietly prefer a world in which Netflix is kept in check by a strengthened Paramount–Warner rather than allowed to absorb one of its chief rivals. Cinema owners and guilds are already warning that a vertically integrated Netflix–Warner group could deprioritise theatrical releases and squeeze independent distributors.

Put together, this is why the odds now tilt toward Paramount. If a clear majority of WBD shareholders tender into the $30 offer, the board’s freedom of manoeuvre will narrow. It may try to use Paramount’s bid to extract more from Netflix, but Netflix’s own shareholders are pushing the other way. A classic squeeze develops.

The most realistic path from here is that either Paramount succeeds at or close to $30, or the process ends with some form of hybrid outcome that still looks closer to Paramount’s vision than to Netflix’s original plan.

How Paramount could still lose

None of this is guaranteed. There are at least four ways this can go wrong for Ellison.

First, the financing could become a political liability. The involvement of Kushner’s Affinity Partners and Gulf sovereign wealth funds has already prompted questions about conflicts of interest and foreign influence in US media. If that becomes a major focus in Washington, regulators could feel compelled to scrutinise the deal more aggressively, undermining Paramount’s claim of quicker clearance.

Second, WBD’s board can exploit doubts about governance. Some investors will be wary of handing control of a systemically important media group to a relatively young acquirer backed by opaque private capital. Netflix is a known quantity with transparent public governance. If WBD can persuade shareholders that Netflix offers better long-term stewardship, even at a lower price, Paramount’s tender may stall.

Third, shareholders may decide they want Netflix equity. A portion of WBD’s register owns the stock because they want exposure to streaming growth rather than to legacy television or cinema. For those investors, the Netflix script, even with its risks, may be more attractive than cashing out at $30 and reinvesting elsewhere. If enough of that cohort votes against change, Paramount’s tender may fail to reach the level needed to force the board’s hand.

Fourth, Paramount’s own share price and credit spreads matter. If markets come to believe that the combined company would be over-leveraged or strategically unfocused, the cost of debt could spike, making the economics of the deal less attractive. The banks’ commitments are not infinite; if conditions change materially, they may seek to renegotiate terms.

If Paramount loses from here, it will not be because its offer was too low, or its messaging too timid. It will be because it failed to allay concerns about who really controls the company, how it will be run and whether the financing structure is robust enough to weather a downturn.

What this means inside the industry

For people working in film, television and news, the identity of the eventual owner matters as much as the price.

A Netflix-owned Warner would likely be run through the lens of subscriber growth, retention and platform economics. Greenlighting decisions would be heavily data-driven; windowing strategies would be designed first for Netflix’s global service and only second for cinemas and third-party platforms.

A Paramount–Warner group would face its own cost pressures. Ellison has talked about the need to “improve cash flow and increase efficiencies”, which is another way of saying there would be consolidation and job cuts where businesses overlap. But his camp also emphasises theatrical releases, franchise building and a more traditional studio model, funded by a broader mix of advertising, subscription and licensing.

Neither outcome is painless. Both involve rationalisation in a sector already under stress. The choice is between two very different visions of what a global media group should be.

From here, the burden of proof lies with WBD’s board. It can insist Netflix still offers the cleaner solution, but it can no longer claim there was no higher bid or no credible funding. The hostile offer has changed that. If Paramount maintains its financial commitments, keeps its narrative disciplined and lets the regulatory and political winds keep blowing against Netflix, it has the better chance of emerging as the new owner of Warner Bros Discovery.

If it fails, the defeat will be personal for David Ellison and reputational for Paramount Skydance. It will mean that price, politics and process were not enough to overcome deeper unease about who should control one of the last great Hollywood conglomerates in an age when distribution, attention and power are converging on a few global platforms.